[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT FILED
U.S. COURT OF APPEALS
________________________ ELEVENTH CIRCUIT
JUNE 11, 2003
No. 01-15575 THOMAS K. KAHN
________________________ CLERK
D. C. Docket No. 91-00986-CV-ASG
ALLAPATTAH SERVICES, INCORPORATED,
a Florida corporation,
ROBERT LEWIS, INC., a Florida corporation,
d.b.a. Trial Exxon, G.G.S.K.1, Inc., a Florida
corporation,
d.b.a. North Stuart Exxon, G.G.S.K., Inc., et al.,
Plaintiffs-Appellees,
Cross-Appellants,
ROY PAGE,
GLEBE ROAD EXXON, INCORPORATED,
Plaintiffs,
versus
EXXON CORPORATION,
a New Jersey corporation,
Defendant-Appellant,
Cross-Appellee.
________________________
No. 01-16244
________________________
D. C. Docket No. 91-00986-CV-ASG
ALLAPATTAH SERVICES, INCORPORATED,
a Florida corporation,
ROBERT LEWIS, INC., a Florida
corporation, d.b.a. Northlake Exxon,
d.b.a. Trial Exxon, G.G.S.K.1, Inc.,
a Florida corporation, d.b.a. North
Stuart Exxon, G.G.S.K., Inc., et al.,
Plaintiffs-Appellees,
ROY PAGE, et al.,
Plaintiffs,
versus
EXXON CORPORATION,
a New Jersey corporation,
Defendant-Appellant.
________________________
Appeals from the United States District Court
for the Southern District of Florida
_________________________
(June 11, 2003)
Before WILSON and FAY, Circuit Judges, and GOLDBERG*, Judge.
________________________
*Honorable Richard W. Goldberg, Judge, U.S. Court of International Trade, sitting by
designation.
2
WILSON, Circuit Judge:
This case arises out of a class action suit filed by approximately 10,000
Exxon dealers who alleged that Exxon Corp. breached its dealer agreements by
overcharging them for fuel purchases. Following a second trial, a jury returned a
special verdict in favor of the dealers. After entering a final judgment for the class
representatives and denying the dealers’ motion for the entry of a class-wide
judgment, the district court certified the following two questions for interlocutory
appeal: (1) whether it properly exercised supplemental jurisdiction over class
members whose claims did not meet the jurisdictional minimum amount in
controversy requirement; and (2) whether an aggregate compensatory and
prejudgment interest award could be entered for the class before the claims
administration process. Additionally, the court urged us to consider all of the legal
issues raised by both parties relating to the disposition of the case. Thus, we also
consider (1) whether Exxon is entitled to participate in the claims administration
process; (2) whether Exxon may assert set-off claims against the dealers; (3)
whether the district court abused its discretion by certifying the class; (4) whether
the court erred when it admitted extrinsic evidence to supplement the Dealer Sales
Agreements (dealer agreements); (5) whether the dealers’ claims were barred by
the statutes of limitations; and (6) whether the court abused its discretion by
3
allowing the dealers’ expert witness to testify at trial. We find no reversible error
and accordingly affirm.
BACKGROUND1
This suit was filed by a class of approximately 10,000 current and former
Exxon dealers in thirty-five states who alleged that in connection with a marketing
program known as the Discount for Cash (DFC) program, Exxon systematically
and intentionally overcharged them for the wholesale purchase of motor fuel
between March 1, 1983 and August 31, 1994. As a result of the overcharges, the
dealers alleged that Exxon breached its obligations to them under the dealer
agreements.
Under the DFC program, Exxon encouraged its dealers to implement a
pricing system under which retail customers who paid cash for gasoline would pay
a few cents less than customers who paid with credit cards. In an effort to
maximize dealer participation in the program, Exxon began charging dealers a
three-percent processing fee on sales of gasoline to consumers who paid by credit
card, but promised to offset the charge by reducing the wholesale price that each
dealer paid for gasoline. Exxon kept this promise for approximately six months
1
A detailed summary of the facts underlying the dealers’ suit is set forth in Allapattah
Services, Inc. v. Exxon Corp., 61 F. Supp. 2d 1308, 1310–13 (S.D. Fla. 1999).
4
and reduced the wholesale price by 1.7 cents per gallon. In March of 1983,
however, it stopped providing the offset without informing the dealers. The
dealers allege that by removing the offset without informing them, Exxon was able
to overcharge them for gasoline during the class period.
Upon discovering that the offset was no longer being provided, the dealers
filed suit in May of 1991, and the case originally was tried to a hung jury in
September of 1999. It was retried in January of 2001, resulting in a unanimous
jury verdict in favor of the dealers. The jury found that Exxon breached its
contractual obligations to the dealers and fraudulently concealed that breach.
Following the return of the jury’s verdict, Exxon filed posttrial motions for
judgment as a matter of law and/or a new trial. The district court denied those
motions, concluding that the evidence presented at trial was more than sufficient
to support the verdict. The court further determined that, as a matter of law, the
dealers were entitled to recover prejudgment interest in addition to their
compensatory damages. Nevertheless, the court denied the dealers’ motion for the
entry of a final judgment for the class, concluding that it had no authority to enter
an aggregate judgment because the jury had not awarded aggregate damages.
Instead, the district court entered a final judgment for the class representatives and
created an ad hoc claims process through which Exxon could contest each of the
5
remaining class members’ claims for compensatory damages.
Because the district court believed that its “order involve[d] a controlling
question of law as to which there is substantial ground for difference of opinion
and that an immediate appeal from the order may materially advance the ultimate
termination of the litigation,” it certified the case for interlocutory review pursuant
to 28 U.S.C. § 1292(b), asking us to resolve the following questions: (1) whether
it properly exercised supplemental jurisdiction over the claims of class members
who did not meet the jurisdictional minimum amount in controversy; and (2)
whether it was proper to enter judgment for the class representatives, but not for
the class as a whole.
DISCUSSION
I. Supplemental Jurisdiction
The first question certified for interlocutory review by the district court was
whether it had supplemental jurisdiction over the claims of all of the class
members, including those who failed to meet the minimum amount in controversy
requirement of 28 U.S.C. § 1332(a). “[W]hether the district court had subject
matter jurisdiction over [this action] is . . . subject to de novo review.” Darden v.
Ford Consumer Fin. Co., 200 F.3d 753, 755 (11th Cir. 2000).
The district court’s question forces us to address whether 28 U.S.C. § 1367,
6
the supplemental jurisdiction statute, overrules the United States Supreme Court’s
decision in Zahn v. International Paper Co., 414 U.S. 291, 301 (1973), that
“[e]ach plaintiff in a Rule 23(b)(3) class action must satisfy the jurisdictional
amount, and any plaintiff who does not must be dismissed from the case.”2
Whether § 1367 overrules Zahn has been the subject of considerable debate
among our sister circuits, which have split on the issue. See Rosmer v. Pfizer Inc.,
263 F.3d 110, 114 (4th Cir. 2001) (holding “that § 1367 confers supplemental
jurisdiction in diversity class actions, so long as one named plaintiff” satisfies the
minimum amount in controversy requirement), cert. dismissed, 536 U.S. 979
(2002); Gibson v. Chrysler Corp., 261 F.3d 927, 934 (9th Cir. 2001) (holding the
same), cert. denied, 534 U.S. 1104 (2002); Stromberg Metal Works, Inc. v. Press
Mech., Inc., 77 F.3d 928, 930–31 (7th Cir. 1996) (holding that § 1367 authorizes a
district court to exercise supplemental jurisdiction over a party that does not
2
We have raised this question before, but never answered it. In Cohen v. Office Depot,
Inc., 204 F.3d 1069, 1080 n.12 (11th Cir. 2000), we declined to address the plaintiff’s argument
that § 1367 overrules Zahn, because “no member of the class ha[d] an individual claim that
satisfie[d] the requisite amount in controversy.” Shortly thereafter, in Morrison v. Allstate
Indemnity Co., 228 F.3d 1255, 1273–74 (11th Cir. 2000), we concluded that it was premature to
address the question, because the named plaintiffs had not had an opportunity to establish that
their claims met the jurisdictional minimum amount in controversy. We therefore remanded the
case with instructions that the district court should consider whether § 1367 overruled Zahn if the
plaintiffs carried their burden of proof on that issue. Id. Since that decision, no further
opportunity to address the question has presented itself until now.
7
satisfy the minimum amount in controversy);3 In re Abbott Labs., 51 F.3d 524,
528–29 (5th Cir. 1995) (holding that as long as the class representatives meet the
amount in controversy requirement, a district court may exercise supplemental
jurisdiction over the members of the class who do not). But see Trimble v. Asarco,
Inc., 232 F.3d 946, 962 (8th Cir. 2000) (holding that Zahn remains viable and that
each member of a class must meet the requisite jurisdictional amount in
controversy); Meritcare Inc. v. St. Paul Mercury Ins. Co., 166 F.3d 214, 222 (3d
Cir. 1999) (finding the text of § 1367 ambiguous and relying upon legislative
history to hold that § 1367 preserves Zahn); Leonhardt v. W. Sugar Co., 160 F.3d
631, 640 (10th Cir. 1998) (holding that § 1367 unambiguously preserves Zahn).
Upon our own review, we agree with our sister circuits that have held that the
language of § 1367 clearly and unambiguously overrules Zahn and allows a
district court entertaining a diversity class action to exercise supplemental
jurisdiction over class members whose claims do not meet the jurisdictional
3
Stromberg Metal Works, Inc. was not a class action suit; it involved two plaintiffs, only
one of whom satisfied the amount in controversy. 77 F.3d at 930. The Seventh Circuit
subsequently applied Stromberg Metal Works, Inc. to a class action suit in In re Brand Name
Prescription Drugs Antitrust Litigation, 123 F.3d 599 (7th Cir. 1997). The Seventh Circuit held
in that case that “[a]t least one named plaintiff must satisfy the jurisdictional minimum. If he
does, the other named plaintiffs and the unnamed class members can, by virtue of the
supplemental jurisdiction conferred on the federal district courts by 28 U.S.C. § 1367, piggyback
on that plaintiff’s claim.” Id. at 607.
8
minimum amount in controversy requirement.4
In addressing this question, “we begin by examining the text of the statute
to determine whether its meaning is clear.” Harry v. Marchant, 291 F.3d 767, 770
(11th Cir. 2002) (en banc). “In construing a statute we must begin, and often
should end as well, with the language of the statute itself.” Merritt v. Dillard
Paper Co., 120 F.3d 1181, 1185 (11th Cir. 1997). This is so because “‘[we] must
presume that a legislature says in a statute what it means and means in a statute
what it says there.’” Id. (quoting Conn. Nat’l Bank v. Germain, 503 U.S. 249,
253–54 (1992)).
Section 1367(a) provides,
Except as provided in subsections (b) and (c) or as expressly provided
otherwise by Federal statute, in any civil action of which the district
courts have original jurisdiction, the district courts shall have
supplemental jurisdiction over all other claims that are so related to
claims in the action within such original jurisdiction that they form
part of the same case or controversy under Article III of the United
States Constitution. Such supplemental jurisdiction shall include
claims that involve the joinder or intervention of additional parties.
4
We are unpersuaded by Exxon’s argument that “[t]he ‘fact that a statute has been
interpreted differently by different courts is evidence that the statute is ambiguous and unclear.’”
The mere existence of a split among the circuits as to the proper interpretation of § 1367 does not
relieve us of our obligation to interpret the statute independently. See Minor v. Dugger, 864 F.2d
124, 126 (11th Cir. 1989) (“Under the established federal legal system the decisions of one
circuit are not binding on other circuits.”); see also Rosmer, 263 F.3d at 118 (“[W]e cannot allow
the fact that other circuits have called a statute ambiguous to negate this circuit’s duty to interpret
the text of the enactment.”).
9
28 U.S.C. § 1367(a). Section 1367(b) continues,
In any civil action of which the district courts have original
jurisdiction founded solely on section 1332 of this title, the district
courts shall not have supplemental jurisdiction under subsection (a)
over claims by plaintiffs against persons made parties under Rule 14,
19, 20, or 24 of the Federal Rules of Civil Procedure, or over claims
by persons proposed to be joined as plaintiffs under Rule 19 of such
rules, or seeking to intervene as plaintiffs under Rule 24 of such rules,
when exercising supplemental jurisdiction over such claims would be
inconsistent with the jurisdictional requirements of section 1332.
Id. § 1367(b).
We believe that it is clear from the plain language of the statute that §
1367(a) is a general grant of supplemental jurisdiction, which is then narrowed for
diversity cases by § 1367(b).5 In considering whether the district court’s exercise
5
Exxon argues that “the text and structure of §1367 [sic] preserve the jurisdictional
requirement of Zahn.” In so arguing, however, it essentially asks us to construe § 1367 in such a
way as to apply only where the court already has original jurisdiction over every class members’
claim. We do not believe that the statute can be read to suggest this. If a district court is required
to have original jurisdiction over every class members’ claim, the last sentence of § 1367(a),
providing that “[s]uch supplemental jurisdiction shall include claims that involve the joinder or
intervention of additional parties” would be superfluous. 28 U.S.C. § 1367(a) (emphasis added).
There would be little reason for the statute to provide for the exercise of claims involving the
joinder of additional parties if the district court first were required to have original jurisdiction
over those claims. We therefore cannot read the statute in this way. See United States v. DBB,
Inc., 180 F.3d 1277, 1285 (11th Cir. 1999) (providing “that courts should disfavor interpretations
of statutes that render language superfluous” (internal quotation marks omitted)).
Additionally, Exxon argues that the legislative history of § 1367 “confirms Congress’
[sic] intent to preserve Zahn and prior cases.” We, however, see no need to parse the legislative
history to divine congressional intent with respect to § 1367, because we consistently have
reiterated that the text of a statute controls and that we may not “consider legislative history when
the statutory language is unambiguous.” Valdivieso v. Atlas Air, Inc., 305 F.3d 1283, 1287 (11th
Cir. 2002) (per curiam), petition for cert. filed, 71 U.S.L.W. 3367 (U.S. Nov. 8, 2002) (No. 02-
728); see also Harry, 291 F.3d at 772 (“Even if a statute’s legislative history evinces an intent
contrary to its straightforward statutory command, we do not resort to legislative history to cloud
10
of supplemental jurisdiction over the dealers’ claims was proper, we therefore first
must determine whether the dealers satisfied the requirements of § 1367(a). The
parties agree that the district court had original jurisdiction over the class
representatives’ claims, because they satisfied the $50,000 jurisdictional minimum
amount in controversy requirement.6 Section 1367(a) therefore authorized the
court to exercise supplemental jurisdiction over those claims that were so closely
related to the original claims that they “form[ed] part of the same case or
controversy.” Id. § 1367(a). Because the dealers’ claims arose from the same
agreements and contractual obligations as the class representatives’ claims, the
requirements of § 1367(a) were satisfied.
Thus, the district court was entitled to exercise supplemental jurisdiction
over the dealers’ claims pursuant to § 1367(a) unless those claims fell within one
of the exceptions listed in subsection (b), which explicitly prevents courts from
exercising supplemental jurisdiction “over claims by plaintiffs against persons
made parties under Rule 14, 19, 20, or 24 of the Federal Rules of Civil
a statutory text that is clear” (internal quotation marks omitted).); Harris v. Garner, 216 F.3d
970, 976 (11th Cir. 2000) (en banc) (“When the import of the words Congress has used is clear
. . ., we need not resort to legislative history, and we certainly should not do so to undermine the
plain meaning of the statutory language.”), cert. denied, 532 U.S. 1065 (2001).
6
The minimum amount in controversy has been raised to $75,000. See 28 U.S.C. § 1332.
11
Procedure.” 7 Id. § 1367(b). Notably, Federal Rule of Civil Procedure 23, which
pertains to class actions, is not one of the enumerated exceptions. Exxon argues
that because § 1367(a) requires that the district court have original jurisdiction
over each member of the class, “it would have been redundant for Congress to
enumerate Rule 23 as a specific exclusion from supplemental jurisdiction in
§1367(b) [sic].” We disagree. The fact that Congress created explicit exceptions
to § 1367(a)’s broad grant of supplemental jurisdiction but did not include Rule 23
among them leads us to conclude that it did not intend to prevent district courts
from exercising supplemental jurisdiction over the claims of class members.
Indeed, it is a well-accepted rule of statutory construction in this Circuit that
“where a statute explicitly enumerates certain exceptions to a general grant of
power, courts should be reluctant to imply additional exceptions in the absence of
a clear legislative intent to the contrary.” United States ex rel. Williams v. NEC
Corp., 931 F.2d 1493, 1502 (11th Cir. 1991). Because we do not believe that the
text of the statute expresses any legislative intent to prevent district courts from
exercising supplemental jurisdiction in diversity class actions, we decline to
“rewrite the statute to insert Rule 23 into § 1367(b)’s list of exceptions.” Rosmer,
7
Section 1367(a)’s grant of supplemental jurisdiction also is subject to the exceptions
enumerated in subsection (c), but that subsection relating to discretionary jurisdiction is
inapplicable to this case. See 28 U.S.C. § 1367(a).
12
263 F.3d at 115; see also Harris v. Garner, 216 F.3d 970, 976 (11th Cir. 2000) (en
banc) (“We will not do to the statutory language what Congress did not do with it,
because the role of the judicial branch is to apply statutory language, not to rewrite
it.”), cert. denied, 532 U.S. 1065 (2001).
Thus, we find that § 1367 clearly and unambiguously provides district
courts with the authority in diversity class actions to exercise supplemental
jurisdiction over the claims of class members who do not meet the minimum
amount in controversy as long as the district court has original jurisdiction over
the claims of at least one of the class representatives. We therefore conclude that
§ 1367 overrules Zahn.
II. Entry of Judgment
We now turn to the second issue certified for interlocutory review – whether
the district court should have entered an aggregate judgment for the dealers based
upon the jury’s verdict finding Exxon liable to the dealers.8 Because we do not
8
Exxon also argues that it was inappropriate for the district court to enter individual final
judgments for each of the named class representatives, because no reasonable jury could have
found that Exxon breached its obligations under the dealer agreements. Exxon’s argument,
however, is little more than an attack on all of the factual findings made by the jury. As we find
that the jury’s verdict was supported by substantial evidence, Exxon’s argument is without merit.
See Brochu v. City of Riviera Beach, 304 F.3d 1144, 1154 (11th Cir. 2002) (“A verdict must
stand unless there is no legally sufficient evidentiary basis for a reasonable jury to find for that
party on that issue” (internal quotation marks omitted).).
13
believe that an aggregate final judgment was warranted in this case, we also must
address the following issues raised in the dealers’ cross-appeal: (1) whether the
district court erred by determining that Exxon is permitted to participate in the
claims process; and (2) whether it is proper to allow Exxon to assert set-off claims
during the claims process.
A. Aggregate Judgment
The dealers argue that once the jury returned a verdict in their favor, the
district court should have entered a final judgment awarding aggregate damages to
the class.9 Although they acknowledge that the jury did not award aggregate
damages, the dealers argue that the court could have calculated the total amount of
damages on its own and entered a judgment reflecting that amount. Assuming
arguendo that the district court had the authority to calculate the dealers’ damages
and enter an aggregate judgment, we do not believe that it would have been
appropriate for the court to exercise that authority in this case.10
As an initial matter, we note that our consideration of whether an aggregate
9
We review the district court’s denial of judgment for the class and entry of judgment in
favor of the class representatives de novo. See Maytronics, Ltd. v. Aqua Vac Sys., Inc., 277 F.3d
1317, 1320 (11th Cir. 2002).
10
Although we make this assumption, we express no opinion as to whether a district court
has the authority to enter an aggregate judgment in a class action suit when the jury has not
awarded aggregate damages.
14
final judgment is appropriate in this case is complicated by the lack of case law
pertaining to this issue. Therefore, like the district court, we find ourselves
without much guidance from other courts. Upon our own review, however, we
agree with the district court that this is not the ideal case for the entry of an
aggregate final judgment, because several significant obstacles prevent the entry
of such a judgment. Moreover, we do not believe that an aggregate judgment
would benefit the class greatly or result in a more expedient disposition of each
dealer’s claim.
Although we believe that Exxon’s liability to the dealers was decided
properly on a class-wide basis, we agree with the district court that the
determination of the amount that each dealer was overcharged during the class
period must take place on an individual basis, taking into account the amount of
compensatory damages to which each dealer is entitled. Such individualized proof
of claims would be necessary regardless of whether an aggregate judgment was
entered, and the considerations that must be taken into account to calculate the
correct amount of damages during the claims process reveal the obstacles to
entering an aggregate judgment for the class. These obstacles include (1)
accounting for those dealers who either have opted out of the class or not
submitted claims; (2) accounting for those dealers whose claims were barred by
15
the Ohio statute of limitations; (3) the difficulty of awarding prejudgment interest
on a class-wide basis when the applicable amount of interest varies from state to
state; and (4) determining whether the dealers’ claims are subject to further
reduction by set-off claims asserted by Exxon.11
In light of these obstacles, we believe that the district court’s decision not to
enter an aggregate judgment was proper, because the judgment would not have
expedited or simplified the claims process. Indeed, it appears that the entry of an
aggregate judgment would complicate the claims process further, and we believe
that the only real effect of entering an aggregate judgment in this case would have
been to set aside a large pool of money, which would have accumulated interest
while the claims process took place.12 Even if the funds were deposited
immediately into an escrow account, the dealers would not benefit greatly from
having the money set aside, because they would not be entitled to receive their
individual shares of compensatory damages until after their claims had been
11
We will address the dealers’ arguments with respect to the statutes of limitations in
Section III(C) and the set-off claims in Section II(C).
12
There is a high probability that an aggregate award of damages would have resulted in a
substantial pool of unclaimed funds at the conclusion of the claims process. Before the district
court and on appeal, the dealers raised the issue of whether Exxon would be entitled to reverter
of the funds remaining at the conclusion of the claims administration process. Because we
determine that an aggregate final judgment is not appropriate in this case, we need not address
this issue.
16
proven.
We thus find no compelling justification for the entry of an aggregate final
judgment in this case, and the dealers have pointed us to no authority suggesting
that the entry of such a judgment was required.13 Therefore, we conclude that,
under the facts of this case, the district court’s refusal to enter an aggregate final
judgment for the class did not constitute reversible error.
B. Exxon’s Right to Participate in the Claims Process
The district court determined that Exxon had a right to participate in the
claims administration process, because it was a real party in interest and would
have to pay the damages due as a result of the verdict and claims process. In light
of that process, it determined that Exxon would be permitted to file objections to
each dealer’s claim contesting (1) whether the dealer actually was a dealer during
the class period; (2) whether the dealer’s claim was subject to a statute of
limitations defense or barred by a release; (3) whether the amount of compensatory
13
We note that this was not a case in which an aggregate award was authorized based
upon the violation of a statute. See Six (6) Mexican Workers v. Ariz. Citrus Growers, 904 F.2d
1301, 1306 (9th Cir. 1990) (allowing the class to submit aggregate proof of damages for
violations of the Farm Labor Contractor Registration Act where the class sought statutory rather
than actual damages and individual proof of damages was not required for recovery). This also
was not a case in which the precise aggregate damages of the class could be ascertained easily by
a simple mathematical calculation. See Van Gemert v. Boeing Co., 553 F.2d 812, 813 (2d Cir.
1977) (determining that the class’s aggregate damages could be calculated by multiplying the
number of unconverted debentures by the difference between the value and redemption price of
the stock).
17
damages and prejudgment interest to which each dealer was entitled was
calculated properly; and (4) whether the dealer’s claim was subject to reduction by
one of Exxon’s set-off claims.
The dealers argue that Exxon had no right to participate in the claims
process, because the determination of liability already had been made and the only
remaining issue in this case was how to distribute the damages. In so arguing, the
dealers rely primarily upon the Supreme Court’s decision in Boeing Co. v. Van
Gemert, 444 U.S. 472, 481 (1980), in which the Court held that Boeing Co. did
not have a present interest in the damage fund that was to be distributed to a class
of investors. We, however, believe that Boeing Co. is inapposite to this case.
In Boeing Co., an investor class action suit, Boeing Co. did not appeal the
district court’s entry of a judgment for the class. Id. at 479 n.5. Rather, its appeal
was narrowly tailored to the issue of whether attorney’s fees could be awarded
from the portion of the judgment fund that remained unclaimed at the conclusion
of the claims process. Id. at 477. The Supreme Court determined that “[t]he
judgment on the merits stripped Boeing of any present interest in the fund” and
thus concluded that Boeing Co. had no interest in the litigation between the class
and its attorneys regarding attorney’s fees. Id. at 481 n.7. The Court, however,
acknowledged that “Boeing did have an interest, arising from its colorable claim
18
for the return of excess money, in whether attorney’s fees could be assessed
against the entire fund rather than against the portion actually claimed.” Id.
Thus, we believe that the dealers’ reliance upon Boeing Co. is misplaced.
Contrary to the dealers’ assertions, that decision does not suggest that a defendant
has no interest at all in the postverdict resolution of class claims; rather, it suggests
that a defendant has no interest in how the class members apportion and distribute
a damage fund among themselves. Id.; see also Six (6) Mexican Workers v. Ariz.
Citrus Growers, 904 F.2d 1301, 1307 (9th Cir. 1990) (“Where the only question is
how to distribute the damages, the interests affected are not the defendant’s but
rather those of the silent class members.”). In this case, however, no damage fund
has been created and there are several issues that must be resolved during the
claims process. As one commentator noted in addressing individual issues among
class members,
If the only issue is to determine the amount of damages which class
members are entitled to receive and this determination can be
accomplished almost mechanically, simple proofs similar to those
used for summary judgment are often appropriate, . . . especially
when individual claims are small or relatively modest. . . .
On the other hand, when large claims are involved, . . . one
would expect that they would be more hotly contested by the
defendants and more vigorously asserted by the claimants. The
economic stakes being more substantial in large claims, fairness
dictates that the procedures should allow for a more formal adversary
proceeding.
19
3 Alba Conte & Herbert B. Newberg, Newberg on Class Actions § 9:64, at 457–58
(4th ed. 2002). Because Exxon has certain defenses to each dealer’s claim, we
believe that an adversarial claims process is warranted in this case. We therefore
conclude that Exxon still has a present interest in the claims process, and due
process requires that it be allowed to participate in that process.
C. Exxon’s Right to Assert Set-Off Claims
Having determined that Exxon has a right to participate in the claims
process, we must address the dealers’ argument that the district court erred when it
determined that Exxon could assert set-off claims against the dealers during the
claims process, because its set-off claims were untimely raised.
Several federal courts have determined that the appropriate time for a class
action defendant to raise affirmative defenses and set-off claims is during the
damages phase of the action. See Aamco Automatic Transmissions, Inc. v. Tayloe,
67 F.R.D. 440, 450 (E.D. Pa. 1975) (determining that the defendant’s
counterclaims “could be effectively presented when individual claims for damages
are presented”); Serpa v. Jolly King Rests., Inc., S.D. Cal. 1974, __ F. Supp. __
(No. 72-423-N, Mar. 29, 1974) (“Once liability is established and claims for
damages filed, then and only then, may the defendants raise specific and detailed
counterclaims to offset the damage claims.”); Donson Stores, Inc. v. Am. Bakeries
20
Co., 58 F.R.D. 485, 489–90 (S.D.N.Y. 1973) (“If liability is established, other
issues, including damages and counterclaims, can be handled on a class member-
by-class member basis.”). We agree with the reasoning of those courts and
therefore find that Exxon was not required to assert its set-off claims in its
answer.14 Thus, the district court did not err in holding that Exxon can raise those
claims during the claims administration process.
III. Exxon’s Remaining Claims
Having answered the two certified questions, we now address the following
additional issues raised by Exxon: (1) whether the class should have been
certified; (2) whether the district court should have permitted the jury to consider
extrinsic evidence pertaining to the dealer agreements; (3) whether the dealers’
14
Ordinarily, a party must assert a counterclaim in its pleadings. See Fed. R. Civ. P. 13.
Rule 13, however, is inapplicable in class action suits, because “absent class members are not
opposing or litigating adversaries for purposes of Rule 13.” Owner-Operator Indep. Drivers
Ass’n v. Arctic Express, Inc., 238 F. Supp. 2d 963, 967 (S.D. Ohio 2003) (internal quotation
marks omitted). As one commentator has explained,
Rule 13 expressly is applicable only to opposing parties.
A court may properly conclude that absent class members are not opposing
or litigating adversaries for purposes of Rule 13, and therefore Rule 13 is
inapplicable in a class context. Because compulsory counterclaims can only be
potentially involved when Rule 13 applies, if absent class members are not
opposing parties within the meaning of the rule, it follows that any counterclaims
that may be permitted in a class action are not governed by Rule 13 and are purely
discretionary with the court.
2 Alba Conte & Herbert B. Newberg, Newberg on Class Actions § 4:34, at 299–300 (4th ed.
2002) (emphasis added). Thus, the district court had discretion to decide whether Exxon should
be allowed to assert set-off claims against the dealers.
21
claims were barred by the applicable statutes of limitations; and (4) whether the
district court should have admitted the testimony of the dealers’ expert witness.
A. Class Certification
Exxon argues that the district court erroneously certified and tried this case
as a class action pursuant to Rule 23(b)(3). Exxon maintains that as a result of this
improper certification, each dealer’s claim and Exxon’s affirmative defenses were
resolved on the basis of a single set of facts, ignoring the unique factual and legal
issues relevant to the claims of each individual class member.
“We review the district court’s grant of class certification for an abuse of
discretion.” Andrews v. Am. Tel. & Tel. Co., 95 F.3d 1014, 1022 (11th Cir. 1996).
“A class action may be maintained only when it satisfies all the requirements of
Fed.R.Civ.P. 23(a) and at least one of the alternative requirements of Rule
23(b).”15 Rutstein v. Avis Rent-A-Car Sys., Inc., 211 F.3d 1228, 1233 (11th Cir.
2000) (internal quotation marks omitted), cert. denied sub nom. Zeirei Agudath
Isr. Bookstore, 532 U.S. 919 (2001). The district court certified this class under
Rule 23(b)(3), which requires “that the questions of law or fact common to the
members of the class predominate over any questions affecting only individual
15
Exxon does not challenge the district court’s finding that the class met the requirements
of Rule 23(a).
22
members.” Fed. R. Civ. P. 23(b)(3).
“[T]o determine whether common questions predominate, we are called
upon to examine the cause[] of action asserted in the complaint on behalf of the
putative class.” Rutstein, 211 F.3d at 1234 (alteration in original) (internal
quotation marks omitted). The common issues among the class in this case were
(1) whether the DFC program imposed an obligation on Exxon to reduce
wholesale prices; (2) whether Exxon breached that obligation when it failed to
continue providing the offset to the dealers; and (3) whether Exxon fraudulently
concealed that breach. If these issues were subject to generalized proof and
predominated over the individual issues raised by Exxon’s affirmative defenses,
class certification was proper. See In re Vitamins Antitrust Litig., 209 F.R.D. 251,
262 (D.D.C. 2002) (“[I]n general, predominance is met when there exists
generalized evidence which proves or disproves an element on a simultaneous,
class-wide basis, since such proof obviates the need to examine each class
members’ individual position” (internal quotation marks omitted).).
Contrary to Exxon’s argument, we do not believe that this case is one
“where initial determinations, such as the issue of liability vel non, turn upon
highly individualized facts.” Rutstein, 211 F.3d at 1235–36 (internal quotation
marks omitted). Exxon’s primary argument in support of its contention that the
23
class should not have been certified is that there were individual issues inherent in
each dealer’s breach of contract claim and its own affirmative defenses. We find
that Exxon’s argument that each breach of contract claim raised an individual
issue is without merit. Because all of the dealer agreements were materially
similar and Exxon purported to reduce the price of wholesale gas for all dealers,
the duty of good faith was an obligation that it owed to the dealers as a whole.
Whether it breached that obligation was a question common to the class and the
issue of liability was appropriately determined on a class-wide basis.
Thus, the real question for the district court was whether the common issue
of liability predominated over the individual issues raised by Exxon’s affirmative
defenses, which pertained primarily to the issue of damages rather than liability.
In similar situations, numerous courts have recognized that the presence of
individualized damages issues does not prevent a finding that the common issues
in the case predominate. See In re Visa Check/MasterMoney Antitrust Litig., 280
F.3d 124, 139 (2d Cir. 2001) (“Common issues may predominate when liability
can be determined on a class-wide basis, even when there are some individualized
damage issues”), cert. denied sub nom. Visa U.S.A. Inc. v. Wal-Mart Stores, Inc.,
536 U.S. 917 (2002); Bertulli v. Indep. Ass’n of Cont’l Pilots, 242 F.3d 290, 298
(5th Cir. 2001) (“Although calculating damages will require some individualized
24
determinations, it appears that virtually every issue prior to damages is a common
issue”); Tayloe, 67 F.R.D. at 450 (“[I]n the event of a finding of liability, damages
might have to be established on an individual basis. This fact alone, however,
does not preclude class action treatment.”). We agree. Based upon the facts of
this case, we believe that Exxon’s liability to the class for breach of the dealer
agreements predominated over the individual issues relating to damages. Thus,
the district court did not abuse its discretion in certifying the class.
B. Extrinsic Evidence
Exxon argues that the district court impermissibly allowed the jury to
consider extrinsic evidence in determining whether Exxon breached its obligations
under the dealer agreements.
“What a contract provision means, or whether it is ambiguous, are questions
of law, which we review de novo.” Reynolds v. Roberts, 202 F.3d 1303, 1313
(11th Cir. 2000). Generally, “parol evidence is admissible to prove the elements
of an agreement [only] where a writing is ambiguous on its face or fails to contain
the elements of a complete contract.” Indus., Invs. & Agencies (Bah.) Ltd. v.
Panelfab Int’l Corp., 529 F.2d 1203, 1211 (5th Cir. 1976). Under the Uniform
Commercial Code (UCC), however, extrinsic evidence of the parties’ “course of
dealing or usage of trade” or “course of performance” may be used to explain or
25
supplement the writing. U.C.C. § 2-202(a). The UCC therefore rejects the
common law rule that parol evidence is admissible only where the terms of a
contract are ambiguous. See id. § 2-202, cmt. n.1(c); see also Columbia Nitrogen
Corp. v. Royster Co., 451 F.2d 3, 8 (4th Cir. 1971) (recognizing that the UCC
changed the common law rule “that extrinsic evidence may not be received to
explain or supplement a written contract unless the court finds the writing is
ambiguous”).
In this case, the district court determined that because Exxon was accused of
breaching its contractual duty of good faith in setting its wholesale prices,
evidence pertaining to “Exxon’s adoption and implementation of the DFC
program, the unilateral amendment of its dealers’ credit card agreements, its
official public explanation of its performance obligation and its claimed history of
meeting its performance obligations to its dealers” was relevant evidence of the
manner in which Exxon set its prices during the period in which the DFC program
was in effect. Allapattah Servs., Inc. v. Exxon Corp., 61 F. Supp. 2d 1300, 1306
(S.D. Fla. 1999). The court thus believed that such evidence would assist the jury
in determining whether Exxon breached its duty under the dealer agreements. We
agree and conclude that the district court correctly determined that the dealers
could use extrinsic evidence to explain the nature of Exxon’s good faith obligation
26
to the dealers.16
C. Statutes of Limitations
Exxon contends that the district court erred when it found that, with the
exception of the Ohio dealers, none of the dealers’ claims were barred by the
applicable statutes of limitations.17 Exxon posits that most jurisdictions required
that a breach of contract action be brought within four years of the breach and that
16
Exxon also argues that the district court erred in submitting whether this case
constituted a normal case under the UCC to the jury. With respect to open-price terms, section 2-
305(2) of the UCC provides that “[a] price to be fixed by the seller or by the buyer means a price
for him to fix in good faith.” U.C.C. § 2-305(2). The official comment to section 2-305(2)
provides that “[g]ood faith includes observance of reasonable commercial standards of fair
dealing . . . . But in the normal case, a posted price or a . . . price in effect . . . satisfies the good
faith requirement.” Id. § 2-305, cmt. n.3 (internal quotation marks omitted). Exxon argues that
because the dealers were charged Exxon’s price in effect at the time of fuel deliveries, it satisfied
the good faith requirement. The dealers alleged, however, that this case was not a normal case,
because Exxon was attempting to drive some of the dealers out of business, and, therefore,
Exxon did not satisfy the good faith requirement. We agree with the district court that whether
this case constituted a normal case was a factual issue necessary to determine whether Exxon
acted in good faith. It therefore was a question for the jury.
Exxon further argues that even if this were a question for the jury, the district court erred
in giving the jury an instruction defining the term “normal” in accordance with the dictionary
definition. Exxon, however, acknowledges that the UCC does not define what constitutes a
“normal” case, and Exxon does not suggest any alternative definition that would have been more
suitable. We previously noted that “to determine the common usage or ordinary meaning of a
term, courts often turn to dictionary definitions for guidance.” CBS Inc. v. PrimeTime 24 Joint
Venture, 245 F.3d 1217, 1223 (11th Cir. 2001). We therefore do not believe that the district
court erred in defining the word “normal” by providing the jury with the dictionary definition of
the term “normal.”
17
After reviewing the relevant law in each jurisdiction, the court determined that
fraudulent concealment was not a defense to the statutes of limitations in Ohio and Florida.
After the trial, however, the court noted that a recent Florida Supreme Court decision changed
the law in Florida pertaining to the delayed discovery doctrine. Based upon that change in the
law, the court concluded that the Florida dealers’ claims were not barred by the statute of
limitations.
27
most of the dealers’ claims occurring prior to May of 1987 were barred, because
the dealers did not file suit until May of 1991. The dealers, however, allege that
the statutes of limitations were tolled, because Exxon fraudulently concealed its
breach.
The district court determined that whether Exxon fraudulently concealed its
breach was a question of fact for the jury. After the jury returned its verdict, in
which it found that Exxon fraudulently concealed its breach, Exxon filed a motion
for a judgment as a matter of law or, in the alternative, a motion for a new trial
based in part upon its contention that the dealers did not prove the elements of
fraudulent concealment. The court, however, found that the dealers presented
“clear and convincing” evidence that Exxon fraudulently concealed its breach and
denied the motion.
“A district court’s denial of a motion for judgment as a matter of law is
reviewed by this court de novo.” Brough v. Imperial Sterling Ltd., 297 F.3d 1172,
1176 (11th Cir. 2002). The motion should be granted “only if there was no legally
sufficient basis for a reasonable jury to find in favor of the nonmoving party.” Id.
at 1176–77 (internal quotation marks omitted).
After a careful review of the record, we believe that the evidence presented
at trial was sufficient to support the jury’s finding that Exxon fraudulently
28
concealed its breach of the dealer agreements. The dealers presented evidence that
each year, at annual meetings between Exxon executives and dealer
representatives, the executives told the dealers that the DFC offset still was being
provided even though the executives knew otherwise. Although these statements
were not made to each individual dealer, they were made to the dealer
representatives who in turn were asked to report to their constituent dealers what
was discussed at the meetings. Exxon argues that the dealers presented no
evidence at trial that the representatives actually did report back to their
constituent dealers, but two Exxon executives testified that the minutes of each
annual meeting were sent to each dealer representative with the intention that they
then be mailed to each individual dealer. This evidence was sufficient for the jury
to find that the Exxon executives’ statements regarding the DFC program were
disseminated among the dealers and that the dealers relied upon those
representations.
Because we find that there was a legally sufficient basis for finding that
Exxon fraudulently concealed its breach, thereby tolling the statutes of limitations,
we conclude that Exxon was not entitled to a judgment as a matter of law or a new
29
trial upon that basis.18
D. Expert Testimony
Exxon argues that the district court erred in admitting the testimony of Dr.
Raymond Fishe, the dealers’ expert witness, because he had no specialized
knowledge of pricing systems in the petroleum industry and his methodology was
flawed.
“We review a trial court’s evidentiary rulings on the admission of expert
witness testimony for abuse of discretion.” Toole v. Baxter Healthcare Corp., 235
F.3d 1307, 1312 (11th Cir. 2000). The district court conducted an extensive six-
day hearing pursuant to Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S.
579 (1993). After the hearing, at which the court heard testimony from both
18
Additionally, Exxon argues that the district court erred by failing to enforce written
releases signed by approximately 5193 of the dealers at the end of their respective terms as
Exxon dealers. The releases purported to release both parties from any and all causes of action
arising out of or in connection with the dealer agreements. The district court determined that,
like the dealer agreements, the releases were governed by the UCC and therefore were subject to
the same duty of good faith as the dealer agreements. It thus concluded that the releases would
be voidable if the jury found that Exxon breached its duty of good faith and fraudulently
concealed its breach.
It is well settled that a party’s fraud can render a release voidable. See, e.g., Kobatake v.
E.I. DuPont De Nemours & Co., 162 F.3d 619, 625 (11th Cir. 1998) (per curiam) (applying
Georgia law); Ingram Corp. v. J. Ray McDermott & Co., 698 F.2d 1295, 1314–15 (5th Cir. 1983)
(recognizing that fraudulent inducement or concealment can void a release). Because we believe
that the jury’s finding that Exxon fraudulently concealed its breach was supported by substantial
evidence, we conclude that the releases signed by the dealers were voidable, with the exception
of the Category-four releases signed by certain Delaware dealers, which the district court
determined were enforceable.
30
parties’ expert witnesses, it entered a lengthy order determining that (1) both
parties’ expert witnesses were qualified to testify; (2) the methodologies of both
experts were sufficiently reliable; and (3) the experts would assist the jury in
understanding the issues at trial. Based upon these determinations, the court
concluded that each expert met the requirements of Daubert and Federal Rule of
Evidence 702.
Given the district court’s exhaustive effort in determining that Dr. Fishe’s
methodology was reliable, we do not believe that it abused its discretion in
allowing him to testify at trial where Exxon was able to cross-examine him fully
and refute his testimony through the use of its own expert witness.
CONCLUSION
Thus, we join with the Fifth, Seventh, Ninth, and Fourth Circuits in ruling
that § 1367 authorizes the exercise of supplemental jurisdiction in a diversity class
action over claims that do not meet the minimum amount in controversy
requirement, overruling the Supreme Court’s holding in Zahn. It therefore was
appropriate for the district court to exercise jurisdiction over the claims of those
class members whose claims did not meet the $50,000 minimum amount in
controversy requirement. We further find that the district court did not err in
denying the dealers’ motion for entry of an aggregate final judgment and devising
31
an appropriate procedure for the administration of each dealer’s claim. With
respect to each of the remaining issues raised by the parties, we find no reversible
error. Accordingly, we AFFIRM.
32
Allapattah Services, Inc. a Florida corp., Robert Lewis, Inc., a Florida corp, d.b.a. Trian Exxon, G.G.S.K.1, Inc., a Florida corp., d.b.a North Stuart Exxon, G.G.S.K., Inc. v. Roy Page, Glebe Road Exxon, Inc. v. Exxon Corporation, a New Jer
Court: Court of Appeals for the Eleventh Circuit
Date filed: 2003-06-11
Citations: 333 F.3d 1248
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